Indecision – “My husband and I are putting our townhouse up for sale within the next month, in hopes to buy a larger house that will accommodate us. Or perhaps to rent.”

Posted on 13 July 2011 | 31 Comments

Kimberley, in an e-mail to Garth Turner at greaterfool.ca 7 Jun 2011 – “My husband and I (with two small children) are putting our home (Vancouver townhouse) up for sale within the next month, in hopes to buy a larger house that will accommodate us. And we would like to stay in the same area. GASP! No more holidays for us. I feel like we should still sell right now, but perhaps cram ourselves into an apartment and rent for a few months, until the bubble has burst! Yes it would be extremely challenging, having to pack and move twice, store everything, not knowing where we would be moving and when we would be moving (children’s schooling etc). But seriously, sounds like it would make sense economically. When exactly is the bubble going to burst?”

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31 Responses to Indecision – “My husband and I are putting our townhouse up for sale within the next month, in hopes to buy a larger house that will accommodate us. Or perhaps to rent.”

  1. jesse | 13 July 2011 at 6:39 am | Reply

    A few months? LOL

  2. matt | 13 July 2011 at 8:02 am | Reply

    I hope my fellow bears have more sense to condone this sort of speculation.

    • matt | 13 July 2011 at 8:03 am | Reply

      more sense than to condone…

    • jesse | 13 July 2011 at 12:54 pm | Reply

      Yup. Being “short” housing by renting and waiting a “few months” for the prices to drop is speculation, same as the negative cash flow buyer.

      One of the big differences in my mind is that the negative cash flow buyer has some chance of getting paid out, even today. I can state with a high degree of certainty that someone “shorting” housing will be disappointed if their short is on the order of months.

  3. Homeowner | 13 July 2011 at 9:06 am | Reply

    You should be happy with this bubble. Look at all the equity you gained from buying this townhome.

  4. Snats | 13 July 2011 at 9:19 am | Reply

    September 14th. 4:02 pm.

  5. blammo | 13 July 2011 at 11:25 am | Reply

    Good luck with that.

    Garth has to know the best thing for them is to stay put and pay down their (modest?) mortgage but that would go against his rep.

    Amateurs speculating with their principal residence based on Internet advice is a ba-ad recipe.

  7. blammo | 13 July 2011 at 1:59 pm | Reply

    If my variable mortgage rate is 2.5% in 2013 (I bet it’s close) I’m willing to risk the 10-15% capital hit TD is predicting for Vancouver (I am not on the West side).

    However, TD is predicting continuing relative strength in China and I’m not sure I’m in that camp:

    “Our forecast carries with it three key risks. First, foreign investor activity could pull back from their current levels. In our base case, we have assumed that investor demand, particularly from the U.S. and mainland China, will remain robust, but is expected to fall off recent highs. A greater pullback than anticipated could have a disproportionate impact on prices than what we present here. Second, house- hold debt levels in Vancouver are gauged to be the worst in the country. While the number of mortgages more than ninety days in arrears was 0.5% in May, the share has been consistently trending up since early 2008. Lower home prices will help keep this number in check, but affordability remains a key risk on our radar.”

    • vreaa | 13 July 2011 at 9:02 pm | Reply

      Most homeowners would be able to ride out a 15% correction.
      Many will be suffering by the 25%-off mark.
      We don’t see ‘just’ a 10%-15% pullback as being possible. After this kind of run up, when prices have hit parabolic rates of increase, the speculative excesses are never wrung out with a small (15%) pause. An initial ‘wave’ drop of 33%-50% off is far more likely (perhaps over 2-3 years?). (And our prediction of the peak to eventual trough drop is now in the range of 50%-66% fall in real prices).
      2008-2009 was not an example of a ‘crash’… it now looks like ‘noise’ on the chart, a fluctuation in normal range. Actually it was likely the beginnings of our crash, bailed out prematurely by an artificial & inappropriate ‘goosing’ of the market via emergency 0% interest rates.
      Only very, very few homeowners will be able to ‘afford’ the 50%+ correction that is coming.

      • rusty | 14 July 2011 at 12:27 am |

        “An initial ‘wave’ drop of 33%-50% off is far more likely (perhaps over 2-3 years?). (And our prediction of the peak to eventual trough drop is now in the range of 50%-66% fall in real prices)”.

        bu-doom tish!
        amateur comedy night at vreaa

      • keeperofthederp | 14 July 2011 at 1:23 am |

        yes, and we’re enjoying watching you try, eyes.

      • blammo | 14 July 2011 at 1:29 am |

        In the US, they are walking down the dollar to make mortgage holders whole again. By thieving from the majority (inflation) a select interest group (banks) can recover their assets (debt).

        Concurrent to these events, Canada is experiencing its own on-going RE euphoria, which I believe, is actually ‘benefiting’ from the current conditions in the US. After all, the USD is the reserve currency by which all global trade is conducted. So by compressing their local market through currency depreciation, the alt-destination countries (UK, Australia, Canada) are (much like the US citizenry) absorbing (joining China) the US debt through RE appreciation (forced low interest rates).

        To look at Canada’s situation in isolation is missing the fact that we are, still, but a small pimple on the elephant’s ass.

        I am still formulating this as I go (as are we all), and as I am not a parent with children etc., I’m not above dumping my PR if I think we are close to rolling over. I’m also not sitting on a 2-3 Million West side prop which too me is a no-brainer (sell).

        But I don’t think we are there yet. I am still trying to figure out what the trigger is/will be (China crash? US recovery? USD collapse?), and if I miss it, so be it. But I personally think that nailing the catalyst is the only game in town. Pointing to a clear sky in the middle of summer (hold the Vancouver weather jokes, folks) and saying there is a storm coming is sort of moot (but nonetheless, entertaining).

      • keeperofthederp | 14 July 2011 at 1:40 am |

        i really appreciate your take on things, blammo

        you are, unlike rusty et al – extremely articulate.

        i suppose in a way, you and the other experts (i am just aware that ‘something is fucked up’) are not just teaching macro-econ to the lurking bulls and posting trolls through very illuminating economic ‘vignettes’ but also how to write and communicate in English in the traditional literary ways – satire, comedy, irony, etc.

        cassandra was pointing at a clear sky, too.

        tra la la

      • blammo | 14 July 2011 at 2:23 am |

        Something is f*cked up (why do we have to use symbols? what’s the diff? everybody knows what we mean?). We are at a precipice (economically, environmentally, spiritually), of that I have no doubt. But when aren’t we?

        I recognize that I am very fortunate (though I work/worry hard too so that has generated some of my good fortune) and I sympathize with those that enjoy/are-attached to Vancouver but are on the outside looking in with regards to RE. So I’m not sticking anyone’s nose into anything but I don’t think its fair either, to get people’s hopes up (sell your house at the top and rent for two months during the crash – lol).

        This blog is hugely entertaining with a literate, culturally aware audience but if you want to ‘get ahead’ I’m not sure if this perspective is productive (cynicism does not pay). Overall, pragmatism and optimism enjoys better returns. It just does. Sometimes it seems naive but for the most part entropy is held back by the human spirit (ingenuity, invention, the will to live, love, hope).

        I have enjoyed many of your posts Derp and I dig your HST avatar.

      • keeperofthederp | 14 July 2011 at 4:29 am |

        we’re all living on borrowed time, on the precipice of the abyss of non existence. total oblivion! nirvana? so you’d better buy a bigger house! at the same time, i like to delude myself that we all go back with “the great magnet.”

        i feel what’s happened is that all around the world we have an extremely predatory (and, by extension, dumb) ruling class, and that the future (re: the movie, idiocracy) is already here. their venality is the product of the flawed popular ideologies of our age. rather than starting with the greeks and later the enlightenment, it’s taught in the universities as the starting point of everything ‘good’ and ‘just’. it’s evident in that old Poppy Bush gaffe about the economy coming before democracy. if they only realized that what’s really in their interests are to appease our interests (which would mean effectively neutering them, permanently) and live happily ever after, we wouldn’t have to be heading towards the rocks in such an obvious way. so much effort and capital is expunged on keeping us from seeing the view from the captain’s bridge, i am frankly enjoying the vilification of Rupert Murdoch – it is astounding that one man can do so much damage to the mental landscape – he has polluted and corrupted the minds of untold millions, he has created a worldview of apathy and misdirected rage and obfuscation – and yet he is held up as a paragon of the self-interested ideal.

        in regards to the above; i’m happy i’ve studied French history – it will come in very handy later – though i hope it doesn’t ever come to that. a slow, drawn out ‘race’ to the bottom is equally as bad, and totally unnecessary.

        a couple of months ago, nemesis sent me some books – i am just finishing up the 2nd of the 3 that he sent, it’s “Death of the Liberal Class” by Chris Hedges – i read Hedge’s other book about a year ago – “Empire of Illusion – The End of Literacy and the Triumph of Spectacle” and a great deal of the beginning of it was covering ground i am very familiar with, having grown up in the Tri-Cities – people who believe professional wrasslin’ is real, people who think Muslim extremists are going to slit the throats of their newborns, pro life bus benches and jesus saves billboards along highways, all that good stuff.

        i always thought during my early/mid teens that i was really just living in a big strip mall, similar to what i witnessed in the western states of the US when we traveled during that time. the damage over the last 15 years to canada is palpable – i have no concept anymore of what life is like beyond kamloops or whistler, as i have not been able to afford to leave for the last 6 years – i am envious of my friends who are still enjoying the canadian experience out on the prairies or up north or even just in the interior. vancouver has changed and if you speak to any long time resident, even the ones who’ve gained huge equity in their real estate holdings, it seems unanimous that we preferred the way it was to the way it’s going. and if our local establishment and the associated vested interests and business class has their way, it’s not going to stop until something akin to an economic structural collapse occurs, or at the very least, basic economic laws come back into play and we see a reversion to mean.

        when you speak of the US exporting their inflation and it coming back to us in the form of this housing bubble rings very true for me, i just hope that traditional bubble dynamics on the downside actually occurs, and that the various totalitarian regimes running centrally managed economies aren’t able to somehow keep things levitating. i take solace in that old joke “the problem with running a command economy is that it’s like flying a plane with a dead stick – sooner or later you hit the ground.”

        back to the topic of “The End of Literacy,” at a time in my life when the Bush war machine had me intensely interested in the erosion of civil liberties here in canada and the states, i meditated on a book by a student of Freud’s, Wilhelm Reich. (in his later years, a bit of a loon, however, how he died and his work destroyed by the federal government remains a sticking point to me – it was this willful attempt to destroy a man that was merely vocal and curious that really disturbed me.) his book that meant so much to me was “The Mass Psychology of Fascism.”

        my father is a WWII survivor of the blitz as a boy in London – he was always fascinated with the war and specifically with dictators (Hitler, Stalin, and Mussolini specifically) – it was always a great subject of interest “How could one man make millions of people do things that were so stupid?”

        i felt then and still do that the ‘one man’ explanation of fascistic movements is basically an over-simplification, that Hitler had backers (like Krupp and Thyssen, whose companies still bear their names today – ridden in an elevator lately?) who exploited the general psychology of the society for their own ends.

        this is where the riots come into play for me, as an expression of mass psychosis and irrationality, that it could happen (again) was of no surprise to me – that so many people are so shocked by it (anger is understandable – shock, though? talk about out of touch with the younger generations – ride a bus, take a skytrain through the suburbs, walk through a mall – the end of literacy is definitely with us. if these kids bothered to pick up a book or have some introspective contemplation about something OTHER than themselves, perhaps the riots may not have happened)

        so my question is, how prone are – and not just in vancouver – the youth of today to mass psychosis and irrationality? i will address this somehow on my blog at some point soon, i have lots of little ideas for semi-original content i am churning over in my little head. as i am convinced that the word is dead in the mass-consciousness, and we are entering a truly video only era, it behooves me to make whatever i create accessible (and understandable) to even the most flagrantly proud moron. i would appreciate any and all help/views/links to etc. of my blog – which you can click on above. unfortunately i am plugging, sorry. if there aren’t going to be any jobs in the future (because there’s hardly any for me now) i may as well do something i enjoy for no money than sit on my ass for no money.

        i speak two languages – vancouverish and english. if you’re not familiar, the former includes using the word “fuck” or “shit” every 3rd word.

        i am optimistic, but not for this epoch – perhaps for people 100 or 200 or 300 years from now – after the population figure experiences it’s own “reversion to mean.”

        i am babbling.

        speaking to my 70 year old mother today, she says she doesn’t care if the house were to lose 60% of it’s value: “if it takes all these idiots down, too, then so be it.”

        she really enjoys the section on here dedicated to speculators – it’s something non-technical that she can understand – the basic human emotions of fear and greed.

        p.s. fuck you, rusty.

  8. vreaa | 13 July 2011 at 9:08 pm | Reply

    We agree with commenters who point out that ‘Kimberley’ is being ridiculously ambitious about her ability to time the market.

  9. Rusty | 14 July 2011 at 8:27 am | Reply

    “Overall, pragmatism and optimism enjoys better returns. It just does”

    well put. I don’t know any wealthy pessimists, not one. And what is this site full of? Optimists or pessimists? Get the picture?

  10. Rusty | 14 July 2011 at 8:34 am | Reply

    “keeperofthederp”

    you are so in need of mental health intervention

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